Wednesday, May 27, 2009

TOP STORY >> Chrysler, GM have obligation to preserve jobs

By GARRICK FELDMANLeader editor-in-chief

If General Motors and Chrysler go through with plans to close 40 percent of their dealerships, 187,000 jobs will disappear — which is more than the number of people Chrysler and GM employ at their plants.

Members of Congress who voted for billions of dollars in bailouts for the automakers think they owe the taxpayers something in return: Saving as many jobs as possible. The U.S. government will own 70 percent of GM, so more plants and dealerships could remain in business.

These politicians have heard from their constituents — the people who own the dealerships, but also the salesmen and mechanics who work there — and they want to put pressure on the carmakers to reconsider closing hundreds of dealerships.

If General Motors and Chrysler can accept billions of dollars in federal bailout money, shouldn’t they preserve jobs for American workers?

Chrysler, which has accepted $5.8 billion in bailout money, will close 800 dealers in June. GM, which has taken $20 billion in federal aid, will let 1,100 dealers stay open until October 2010 before their franchises are terminated.

A bankruptcy court hearing next week could determine if Chrysler can shut all the dealerships it wants gone.

Larry Crain Jr., who owns a chain of car dealerships in central Arkansas, filed an injunction Friday to keep the Crain Chrysler-Dodge-Jeep store on University Avenue open.

Chrysler notified Crain and Cook Jeep in Little Rock on May 8 that they would lose their franchises. (General Motors says it will close Gwatney Pontiac Buick-GMC in west Little Rock, but Gwatney Chevrolet in Jacksonville and Gwatney Pontiac Buick-GMC in Sherwood will stay open.)

Crain says it makes no sense for Chrysler to shut down his store when his dealership has met the company’s sales goals and it even offered to build a new dealership in southwest Little Rock.

“If we’re given due process,” Crain said, “we’d be confident we’d prevail. They have no right to terminate our agreement.”

He cites state antitrust laws that protect Arkansas dealers from losing their franchises on short notice.

Crain says his dealership has exceeded sales goals and done everything Chrysler has asked. “We were doing well,” he insists.

Despite slower sales everywhere, he says his other dealerships are also doing well, including Crain Ford in Jacksonville and west Little Rock, Crain Hyundai in Sherwood, Crain Hyundai-Mazda in Little Rock, Crain Mitsubishi and Kia in Sherwood, Crain Chevrolet in Little Rock and Crain Pontiac-Buick-GMC in Conway.

Chrysler won’t give back the $5.8 billion it “borrowed” from taxpayers, so shouldn’t the company at least keep its profitable dealerships open and thousands of people working, selling and servicing cars and circulating their income around the community?

Nearly 2,000 dealers are scheduled to close — 789 Chrysler franchises as soon as June 9 — as part of a restructuring plan by the struggling automakers to stay afloat.

Congress will soon hold hearings to find a way to help some of the endangered car dealers stay open.

But even before Chrysler went into bankruptcy (General Motors will file Monday), a third of Arkansas dealers closed their doors this decade, costing 2,500 people their jobs. The state is now down to 262 dealers, and that number could drop significantly if domestic carmakers continue to falter.

The Committee of Chrysler Affected Dealers says the group has bought more cars in recent years to help Chrysler and made improvements the company had demanded.

According to the committee, “Chrysler’s proposed asset sale and request for immediate termination of the dealer franchises will destroy several hundred independent businesses, ruin the livelihoods of their owners, cause the loss of thousands of jobs and precipitate inevitable personal and business bankruptcies.”

The politicians have taken note of the alarming number of car dealers who are going out of business and the thousands of jobs that will go with them. They could pressure the automakers to keep many of their unwanted dealerships.

The Senate Commerce Committee, chaired by John D. Rockefeller IV (D-W. Va.), wants to find out if some of those dealers deserve a chance to stay in business.

Sen. Kay Bailey Hutchison (R-Texas), the committee’s ranking member, has also voiced support for the dealers, who could be stuck with millions of dollars in inventory if they go out of business in a couple of weeks.

Sen. Blanche Lincoln (D-Ark.) is also supportive of the dealers, so maybe there’s a boomlet favoring the endangered dealers.

Some of them could win a reprieve. Crain hopes his Chrysler-Dodge-Jeep dealership will be among them.